Services by stem cell banks qualifying as healthcare are exempt from service tax under Notification No. 25/2012-ST, and extended limitation periods require proof of intent to evade tax.

JUDGMENT :

R. MAHADEVAN, J.

1. These appeals have been preferred by the appellant/assessee challenging the common Final Order dated 02.08.2024 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Ahmedabad¹ [For short “CESTAT”] in Service Tax Appeal Nos. 12168/2018 and 11738/2016. By the impugned order, the CESTAT rejected the appeals filed by the appellant and upheld the orders passed by the lower authorities. In doing so, it held that the services of enrolment, collection, processing, and storage of umbilical cord blood stem cells, provided by the appellant during the period from 01.07.2012 to 16.02.2014, do not fall within the scope of “Healthcare Services.” Consequently, the appellant was held liable to pay service tax on the said services along with interest and penalties.

2. The basic facts of the case, as projected by the appellant, are as follows:

2.1. The appellant is a joint venture company of M/s. Stemcyte Inc., USA, M/s. Apollo Hospital Enterprises Ltd., and M/s. Cadila Pharmaceuticals Ltd., established in 2008. It is engaged in the collection, processing, testing, and storage of umbilical cord blood units and their therapeutic application. The appellant is a member of the Association of Stem Cell Banks of India.

2.2. On 27.12.2011, the Ministry of Health and Family Welfare, Government of India, issued notification No. GSR 899(E) notifying the Drugs and Cosmetics (3rd Amendment) Rules, 2011. Under these rules, cord blood banks were required to obtain registration. Part XII-D of the Rules set out detailed requirements relating to the collection, processing, testing, and release of umbilical cord blood-derived stem cells.

2.3. Subsequently, the Ministry of Finance, Government of India, issued Notification No. 25/2012-Service Tax dated 20.06.2012, which provided a consolidated list of services exempt from service tax. Under Serial No. 2 of the said notification “Healthcare Services” were exempted. This notification superseded the earlier Notification No. 12/2012-Service Tax dated 17.03.2012. Accordingly, with effect from 01.07.2012, the negative list regime of service tax was introduced, rendering all services taxable unless specifically included in the in the negative list or expressly exempted otherwise.

2.4. On 21.09.2012, the Association of Stem Cell Banks of India submitted a representation to the Ministry of Health and Family Welfare, Government of India, seeking clarification on whether the services rendered by stem cell banks qualified as “Healthcare Services.” In response, the Ministry, after consultation with the National AIDS Control Organization, issued an Office Memorandum dated 22.05.2013, clarifying that the services rendered by stem cell banks are part of “Healthcare Services” and may be considered for exemption from service tax.

2.5. On 24.10.2013, the appellant obtained Service Tax Registration No. AALCS7174BSD001 under the category “healthcare services by clinical establishment, health check-up/diagnosis, etc.” from the Central Board of Excise and Customs.

2.6. Subsequently, the Deputy Commissioner of Central Excise, Ahmedabad-III, issued a letter dated 02.12.2013 to the appellant requiring them to submit documents relating to the services provided by it. The appellant submitted the requested documents on 30.12.2013.

2.7. Thereafter, a search was conducted at the appellant’s premises on 06.01.2014, during which, statements were recorded and